At every point on the IS curve,the level of income on the horizontal axis equals
A)planned autonomous spending.
B)planned autonomous spending times the multiplier.
C)planned autonomous spending divided by the multiplier.
D)planned expenditures times the multiplier.

Question

Quizplus · Accepted Answer

The IS curve represents all combinations of interest rates and output (income) where the goods market is in equilibrium. At any point on the IS curve, the level of income equals planned autonomous spending times the multiplier. This is because the multiplier amplifies the effect of autonomous spending on the overall level of income in the economy.

At Every Point on the IS Curve,the Level of Income